Derive Predictions Update: February 18th 2025
Derive.xyz Predictions: BTC Market Dominance Hits 60.7% – Predictions for Volatility and ETH’s Path to Recovery
February 18, 2025 By Nick Forster
BTC volatility forecast to rise
Currently, BTC's 7-day implied volatility (IV) is hovering around 40%, while 6-month volatility sits at 54%. While ETH's 7-day IV is significantly higher at 66%, matching its 6-month volatility.
On the surface, this suggests a period of relative calm before larger price movements in Q3. However, the notable discrepancy between BTC and ETH volatility signals that BTC may be undervalued, considering its 2-year high in market dominance (60.7%), increasing momentum for BTC strategic reserves, like Texas' symbolic plans, and major geopolitical developments such as the resolution of the Israeli/Palestinian conflict and progress in Ukraine peace talks.
The chance of BTC hitting above $115K at the end of this quarter is down to 12% from 17% last week.
ETH is due for a recovery while SOL faces downward price pressure
ETH's market dominance has halved since April 2023, from 20.5% to 10.5%, as liquidity and attention have shifted to Solana (SOL) and, more recently, XRP.
Despite this, ETH has a solid foundation for a resurgence. The Pectra upgrade, scheduled for April 8 for example, is bringing network improvements, faster transactions, and better staking mechanics. Vitalik’s push for a 10x increase in the L1 gas limit, is citing improved application development and security. And the ETH Foundation's recent $120 million allocation to DeFi projects, is signaling a renewed focus on adoption and institutional interest through ETH Realize.
There’s now a 30% chance ETH will hit above $3K by the end of the quarter, up from 28% last week.
In contrast, Solana faces a $2 billion unlock in 12 days, representing nearly 2% of the token's fully diluted value (FDV), which is expected to put downward pressure on its price. Alongside ongoing negative sentiment surrounding meme coins, Solana could face a difficult few weeks ahead.
We’re seeing a 10% chance SOL settles above $280 by the end of the quarter, and a 20% chance it will reach below $170 by same date.”